Commissioner Of Income Tax, Udaipur v. M/S Hindustan Zinc Ltd., Yashad Bhawan, Udaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN ATJODHPUR D.B. Income Tax Appeal No. 7/2004 Commissioner of Income Tax, Udaipur Versus M/s Hindustan Zinc Ltd., Yashad Bhawan, Udaipur ----Appellant ----Respondent For Appellant(s): Mr. K.K. BissaFor Respondent(s): Mr. Anjay Kothari HON'BLE MR. JUSTICE SANDEEP MEHTA HON'BLE MS. JUSTICE REKHA BORANA Order 09/01/2023 The present income tax appeal was admitted on 12.02.2004 while framing the following substantial questions of law: “1. “Whether on the facts and in the circumstances ofthe case, the Hon’ble ITAT has grossly erred in law inupholding the order of the CIT(A) ignoring: (i) the legal position that expenditure incurred on a newproject can not be considered as revenue expenditureon expansion even through the assessee is in the sameline of business; and (ii) the fact that expenditure incurred on exploring leadat Dhukanda mines and on laying new water pipe linefrom Gosunda Dam, has undoubtedly broughtin/produced enduring benefit to assessee?” Learned counsel for the revenue candidly admitted that theissue is no more res integraand has been decided against theRevenue by the Division Bench of this Court in the case of Commissioner of Income-tax vs. Hindustan Zinc Ltd.reported in [2009] 221 CTR 631 (Rajasthan) decided on30.01.2009 and the special leave petition being Special Leave toAppeal (Civil) No.28563/2009 preferred by the Department against the said judgment has also been dismissed vide orderdated 18.07.2011. In the case of Hindustan Zinc Ltd. (supra), the Division Bench held as under: “Adverting to the facts of the present case, admittedly,the assessee’s super smelter plant requires adequatequantity of water for its operation and unless and until,water is available, the super smelter plant would notfunction and would not be able to produce any items.Admittedly, the Ghosunda Dam has beenconstructed by the State Government and theassessee has made expenditure for its alterationso as to ensure sharing of the water with the StateGovernment without having any right or ownership inthe dam or the water. Even, the assessee’s share ofwater is also determined by the State Government.Thus, the expenditure incurred by the assessee forcommercial expediency relates with carrying on ofbusiness and falls within such matter expenditureas prudent businessman may incur for the purposeof the business.The operational expensesincurred by the assessee solely intended forfurtherance of the enterprise can be no means betreated as expenditure of capital nature.” In view of the ratio as laid down in the case of HindustanZinc Ltd. (supra), the present appeal stands dismissed. (REKHA BORANA),J (SANDEEP MEHTA),J 85-T.Singh/-